This relative new business model was attributed to new emerging companies focused primarily on new technologies and the Internet. But, if a startup is an emerging company, when that company is doing well and achieves significant turnover figures, does it stop being so? First let's see in more detail what is considered a startup. Startup is the Anglo-Saxon term used to refer to emerging projects with ideas generally associated with innovation and technology. In other words, it is an emerging company that seeks to develop a scalable and repeatable business model. In other words, it focuses on the research and development of processes to commercialize an innovative product or service. To do this, they need help from investors or Business Angels who invest in their projects. When those revenues are high, and the company as such grows too much, it is said that it ceases to be a startup and becomes a company, such as Google and Facebook for example. In contrast, standard companies apply an existing and proven business model and are dedicated to executing the established processes to produce and market a good or service in search of revenues and profits. As this is a slightly ambiguous topic that may require some discussion, we will take the characteristics defined by Marek Fodor, president of Kantox and co-founder of Atrápalo, companies that started out as two successful startups, which stopped being successful a long time ago. According to Fodor, a startup ceases to be a startup when it meets these characteristics:
- When the company manages to spend as much as it earns.
- Most employees work 8 hours a day, no more.
- If the founders or bosses have an independent firm from the rest.
- In the event of the absence of the boss or any of the employees, the company continues to work the same or better.
- If the company is more than two years old.
- If you haven't yet needed funding beyond the initial one.
Although some of these characteristics are consistent, there are some where we disagree, especially the two-year-old one. According to Fodor, 24 months is a reasonable period for a startup to continue to be referred to as a startup, but after that time it is a company like any other. We don't agree on this, since we believe that a startup after two years can continue to grow and adapt to the market and, therefore, be able to continue to be dubbed a startup. In this sense, a biotechnology startup that requires clinical trials and validations is not the same as a DNVB that in two years it has already been able to launch all its star products on the market. Despite disagreeing on some of the points, we believe that Marek Fodor's list is quite accurate, especially in terms of spending versus investment and the company's operation and schedules. Although it should not be taken at face value since each startup or company is a world. Do you think that a startup ceases to be a startup when it acquires those characteristics?
